1. Field of the Invention
This invention relates to electricity generation. More particularly, it relates to allocating certain energy feedstocks to power storage devices.
2. Description of the Related Art Including Information Disclosed Under 37 CFR 1.97 and 1.98.
Production companies today produce energy feedstocks, such as natural gas, fuel oil and coal. They transport and sell these raw feedstock items to, among others, producers of power such as electric utilities. Energy feedstock includes but is not limited to oil, natural gas, coal and other combustible or natural systems. These products are used to create heat, electricity and other important uses.
Operating “netback” is a financial metric used specifically in the oil and gas industry as a benchmark to compare performance between time periods, operations and competitors. It is a measure of oil and gas sales net of royalties, production costs, transportation, taxes, and any other expenses such as the allotted downstream cost of CO2. Today, as feedstock flows downstream, producers lose control. Producers seek to optimize their netback from their produced feedstock. An additional cost to production is that partially depleted but still-producing natural gas wells often require gas compression to raise the gas from such lower-pressure wells to line pressure for transporting pipelines. This cost across the multitude of quick-to-deplete shale gas wells will likely become a greater overall component in the reduction of the operating netback.
The measure of netback is generally calculated based on the oil or gas selling unit—e.g., per barrel in the case of oil or per 100 cubic feet (“CCF” or “Ccf”) in the case of natural gas. An alternative unit for gas, the therm, is a non-SI unit of heat energy equal to 100,000 British thermal units (BTU). It is approximately the energy equivalent of burning 100 cubic feet (often referred to as 1 Ccf) of natural gas.
Since gas meters measure volume and not energy content, a therm factor is often used by gas companies to convert the volume of gas used to its heat equivalent, and thus calculate the actual energy use. The therm factor is usually in the units therms/Ccf. It varies with the mix of hydrocarbons in the natural gas. Natural gas with a higher-than-average concentration of ethane, propane or butane will have a higher therm factor. Impurities, such as carbon dioxide or nitrogen, lower the therm factor.
The volume of the gas is calculated as if measured at standard temperature and pressure (STP). The heat content of natural gas (per unit of mass) is solely dependent on the composition of the gas, and is independent of temperature and pressure.
Netback may be calculated by subtracting certain costs from the selling price of a feedstock. For example, suppose an oil company's Canadian operation sells oil at an average of $80 per barrel. If royalties, production and transportation costs equal $25, $15 and $18, respectively, for each barrel produced, the operating netback for the Canadian operation equals $22 per barrel. The calculated operating netback may be compared to that specific operation's past performance or to a competitor's performance in the same region. The determination of these values can be automated and made more granular as the spot market of the price of oil, gas and coal fluctuates in the world markets. Netback can be calculated on a per-well or per-facility basis.
Not only does the energy feedstock producer look to compare performance from land lease royalties, production costs and transport, it may also set up hedging activities in the marketplace. Hedging has become another important activity for production companies to balance their capital investment, reserve development, and production sales cycles. The problem is that the market of producers and timing of this cycle is disconnected from the eventual sales price of the product. There are too many reasons for this disconnect to make the prediction of the price they will receive as the netback of their sales. Some of the factors include the economic climate, weather, regional supply and mineral owner leasehold requirements.
Feedstock producers may drill and complete oil and gas wells. In the case of natural gas, it is generally conditioned for market at the well head or at gathering plants. At the point of entry, it is cleaned and made ready for combustion and put into pipelines which move it to market. There are a number of costs along the way which include transport and gas contract assessment of market prices on a daily and sometimes hourly basis. Generally, producers cannot control the sales price of their product as the market determines the spot price and these producers are subject to market pricing at any given time. Moreover, traders with large international hedge funds move these markets for speculative purposes. Lastly, the dynamics of energy production have been changed by the evolution of shale gas explorations and production and methods to mine this feedstock. Fundamentally, the world of exploration and risk in this business has shifted to where expected return on investment is less but the risk associated with achieving the returns has also been lowered. Hence, exploration for natural gas in shale is more often referred to as mining. Consequently, reserves are massive and oversupply has become the critical problem. Competition for these mineral lands, short term mineral lease provisions and strict continuous drilling provisions drive producers to drill more wells than might be prudent, as shut-in gas provisions require in most cases continued royalty provisions to the mineral owner. These shut-in gas provisions force the producer to sell gas even in times of low pricing. While natural gas is a featured feedstock this invention applies to all energy producers of various forms of feedstock.
Downstream from the producers are generators of power such as electricity. Further downstream from the power generators are power consumers, i.e. customers. Because power demands are often higher at certain times of day, the price of a kilowatt-hour (KWH) of electricity can vary dramatically. For instance, during a typical day in California, the price of electricity can fluctuate from 1/10 of one cent per KWH to around 3.5 cents per KWH. This situation lends itself to opportunity if short term power supplies such as battery-stored electricity can be introduced into the grid at or near the peak price times. What producers need is an automated system that determines whether, at any given moment, the raw feedstock should be sold as is, or whether the producer should turn that feedstock into electricity and store it for later sale. Further, the system may determine, using real-time data, the best times to sell electricity onto the grid. Finally, the system may preferably be configured to automate all actions to effect sale of feedstock or electricity generation, once determinations are made, rather than requiring human intervention.